In this case study, a state-wide transportation agency in an eastern state, labeled the “Eastern DOT,” calculated the value of an existing bridge by determining the remaining user and social benefits of the structure. By comparing the anticipated lifecycle benefits with and without the bridge, Eastern DOT was able to determine the transportation and social value of the bridge to the traveling public and justify ongoing investments to keep it in good condition.
Background
Eastern DOT’s primary driver for calculating and reporting asset value is to comply with the Federal Highway Administration’s (FHWA) requirement that State DOTs include a calculation of the value of National Highway System (NHS) pavement and bridge assets in its transportation asset management plans (TAMPs). In prior TAMPs, Eastern DOT employed a condition-based depreciation approach based on replacement costs to understand and report asset values. However, this approach does not evaluate or communicate the value these assets provided to the public or the potential transportation or social loss that could result from failure to upkeep the assets. Eastern DOT decided to supplement its calculation methodology by testing an economic value-based approach for calculating the economic value of a bridge to the public.
Methodology
Data
Eastern DOT first determined traffic routing impacts in the absence of the bridge and then estimated future volumes and travel distances and times both with and without the facility. Starting with current volumes on the current and alternative routes, Eastern DOT computed the loss of demand due to congestion and assembled an inventory of travel times “with” and “without” the bridge. This inventory included motor vehicle traffic (car and light, medium, and heavy truck) and active transportation trips. The transportation data was supplemented with economic valuation estimates based on US Department of Transportation (USDOT) and Environmental Protection Agency (EPA) guidance.
Economic Value Approach
Eastern DOT assumed that the economic value equals the lifecycle benefits to users of having the asset in place and in good working condition. To determine these benefits, Eastern DOT calculated the travel time loss associated with the alternative routing required without the facility, including the loss to existing users of the replacement route who would face added congestion with additional traffic, the additional costs of operating vehicles along longer, more congested routes, the change in crashes expected due to the net change in vehicle-miles traveled (VMT) caused by the longer, slower route, changes in emissions, loss of mobility for those current trip makers who could be expected to avoid trip-making due to the longer, slower routing, and loss of bicycle trip access. There may be further disruptions or changes in the economy. These were not considered in the economic value approach, which focused only on the direct impacts.
Eastern DOT valued these impacts using USDOT and EPA estimates of travel time and costs, mobility value, costs of crashes by type, and the value of active transportation options. The net value of travel and emissions was calculated for both the “with” and “without” bridge cases over a thirty-year forecast. The future benefits were discounted based on USDOT guidance for an appropriate discount rate and then summed for each case. The Eastern DOT compared the total benefits of each case to estimate a loss that occurs in the “without” bridge case to determine its net present user and social value.
Results
Table 9-13 details the estimated user and social value by benefit category for both a current dollar and discounted dollar perspective. Consistent with USDOT guidance, the Eastern DOT applied a 3.1 percent discount rate, except for CO2 which was discounted at 2.0 percent (also per USDOT guidance). The discounted dollar estimate is the better economic value of the bridge.
Table 9-13. Asset User and Social Value Results
| Impact Category | Over the Project Lifecycle | |
|---|---|---|
| Constant Dollars | Discounted Dollars | |
| Costs of Additional Travel Time | $9,670.0 | $5,914.7 |
| Additional Vehicle Operating Costs | $846.4 | $522.9 |
| Safety Costs | $331.7 | $205.3 |
| Total Emission Costs | $153.6 | $109.6 |
| Loss of Mobility Value | $119.3 | $73.0 |
| Lost Bicycle Route Benefits | $0.01 | $0.007 |
| Total Bridge Value | $11,121.1 | $6,825.7 |
Lessons Learned
Lessons learned from the Eastern DOT’s experience in developing an economic value-based approach for bridge asset valuation include:
- Consideration of the travel impacts of the “without” case is crucial to understanding the facility valuation.
- The valuation approach applied utilizes speed-flow and elasticity of demand estimates to calculate future travel behavior.
- An approach utilizing a travel demand model might result in more defendable estimates.
- Economic valuation of assets is not widely understood but travel benefits are easily grasped by policy makers who intuitively understand the public benefits associated with their assets.
- As a result, an economic valuation is useful for justifying investments to maintain assets over a lifecycle.
- Future improvements to this case study could include using a travel demand model to estimate more precise rerouting travel impacts that may occur with and without the bridge.
- In addition, the estimated asset value reflects the operating conditions of the structure (e.g., traffic volumes and speeds experienced by users), but it does not consider asset deterioration. A variant of this approach could adjust the economic valuation using a measure of asset condition such as a bridge health index.